American Express Co.’s third-quarter revenue and profit soared to record levels as the company continued to attract new cardholders willing to pay an annual fee for its premium products.
Amex reported $15.4 billion in revenue, topping analyst estimates and surpassing the $13.6 billion it generated in the same period a year prior. That was aided by a 20% increase in net card fees, with Amex saying fee-based cards accounted for more than 70% of all new accounts it added in the quarter.
“Demand for our premium products remains high,” Chief Executive Officer Steve Squeri said Friday in a statement. “The investments we have made in our value propositions are driving brand relevance across generations.”
For years, Amex has been investing in its Platinum card, which comes with a $695 annual fee. During the quarter, the company announced it will add more perks to its Business Gold Card and raise the annual fee to $375 from $295.
Amex shares slipped 1.1% to $148 at 8:51 a.m. in early trading in New York. The company’s stock has climbed 1.27% so far this year, outpacing the 0.8% gain of the Dow Jones Industrial Average.
Net income for the quarter rose 30% to $2.45 billion, or a record $3.30 a share. That was higher than the $2.95 average of analyst estimates compiled by Bloomberg.
For much of the last few years, Amex has benefited from a resurgence in travel following the pandemic. Now, though, growth in spending on the firm’s cards is slowing, making for unfavorable comparisons to a year ago.
Total network volume jumped 7% to $420.2 billion, missing estimates and the lowest level of growth in ten quarters, according to data compiled by Bloomberg.
Spending growth “continues to be very strong off a high base,” Squeri told analysts on a conference call. “The current billings growth that we have is in line with what our long-term growth aspirations are.”
Amex also joined its credit-card rivals in setting aside more money to cover souring loans, with provisions jumping 58% to $1.23 billion in the third quarter. That beat the $1.18 billion average of analyst estimates compiled by Bloomberg.
The company reiterated its guidance for full year revenue growth to rise as much as 17%, while earnings per share should fall within $11 to $11.40. Longer term, it continues to expect revenue growth in excess of 10%, while profits should rise by a percentage in the mid-teens, Amex said.
This article was provided by Bloomberg News.
